Madagascar to receive US $37-million AfDB Crisis Response Budget Support Loan

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Following approval of combined 2014-2016 Interim Country Strategy Paper (I-CSP) & Portfolio Performance Review (CPPR)

The African Development Bank Group (AfDB) has approved a US $37-million (UA 25-million) Crisis Response Budget Support loan to Madagascar for the financing of its Emergency Economic Recovery Programme (PURE).

The loan approved by the AfDB Group’s Board on Wednesday, November 5, 2014 in Abidjan falls under Pillar I window of the Transition Support Facility (TSF) to which the country became eligible following its classification as a fragile state by the AfDB and the World Bank in 2013 and 2014.

It aims to address the urgent and priority needs of the Malagasy people who have been marginalised by the protracted political crisis that paralyzed the country for five years (2009-2013).

“PURE is part of a concerted effort of development partners that materialized after the political normalisation in 2014, to support the new authorities in mitigating the socio-economic impact of the political crisis by financing urgent needs and thereby creating the conditions for sustainable and inclusive economic recovery,” AfDB officials said.

The programme aims to support the restoration of the State’s capacity to provide priority basic social services and create the conditions for sustainable growth that would enable Madagascar to gradually emerge from fragility. It is based on a combined 2014-2016 Interim Country Strategy Paper (I-CSP) and Country Portfolio Performance Review (CPPR) approved by approved by the Board earlier on Wednesday.

The I-CSP aligns with the transition phase of Bank Group interventions designed to address the country’s fragility by i) Strengthening governance to consolidate the State; and (ii) Development of rural access infrastructure to reduce food insecurity.

PURE also has the following specific objectives: (i) enhance public resource mobilisation; (ii) improve the quality of public spending by reducing fuel subsidies and lending significant support to priority basic social sectors, particularly education and health; (iii) support public investment programmes; and (iv) stimulate the private sector by clearing identified domestic arrears.

Aligned and consistent with the Bank’s Interim Country Strategy Paper (iCSP) for 2014-2016, the reforms it supports contribute generally to the achievement of the priority actions of Pillar I of the iCSP, namely "Strengthening Governance to Consolidate the State," and specifically to the attainment of the two thrusts of that Pillar: "Strengthening Management" and "Stimulating Private Investment".

The programme also takes into account governance and accountability, as well as private sector development, which are two operational priorities identified in the Bank's Ten-Year Strategy 2013-2022. Moreover, PURE is aligned with two of the three pillars of the Governance Strategic Framework and Action Plan, 2014-2018 (GAP II): public management and improvement of the business climate. PURE is also aligned with the Bank’s Private Sector Development Policy, 2013-2017; particularly Pillar I on business climate improvement.

The Bank Group’s active portfolio in Madagascar amounts to US $367.17million (UA 248.37 million) in 10 public sector projects funded to the tune of US $211.34 (UA 142.96 million), and three private sector investments totaling US $155.83 million (UA 105.41 million).